In praise of Freecycle and Buy Nothing groups

One can see the waved - and clenched - fists, hear the whoops of joy, as the hippies and communalists get one over on us capitalists and free marketeers:

There are 7,000 Buy Nothing groups with more than 5 million members worldwide. But their appeal goes beyond the chance to swap everything from nettles to power tools

See? People freeing themselves from the confines of hyperconsumerism!

…but what distinguishes the Buy Nothing project from Freecycle, Freegle, Olio and their ilk is that the emphasis is less on stuff, per se, and more on community. In what Buy Nothing describes as its “hyperlocal gift economies”, users are encouraged to let items “simmer” rather than giving them away to the first person who asks, perhaps suggesting they share a joke or provide a story explaining why they would like the item.

This is Polanyi’s web of mutual community rather than the impersonal, monetised, transaction with a stranger.

However, it does need to be pointed out that this is entirely part of the plan, our plan.

Our aim in having an economy, a civilisation even, is in enabling folk to be as rich as they can be. As liberals we define that richness as being according to their own lights. Worth, value, these are always in the weighing of the consumer, no one else.

Some folk do value that recovery of something seemingly of no use to others. Some do value that communal feeling, that not transacting with someone a continent away. At which point, good for them.

We value global markets, capitalism even, simply because they are useful ways of producing that value that many do, umm, value. They are not reifications of some ideal, they’re simply useful tools. If value is created by not using those tools well, tant pis and so what? It’s the value creation which is the goal and who, really, cares how it is reached?

Or, more simply, by their own standards and evaluations people are being made richer through voluntary transactions. Why would we be against that?

Party? What party?

“Prime Minister, I fear the troops have become a little restive.” 

“Yes, Humphrey, I had noticed.  The question before us now is whether they will recognise that all great men have their peccadillos.  I mean look at Lloyd George.  Churchill never paid for his cigars and Kennedy was in cahoots with the mafia.  They certainly can’t accuse me of that.” 

“All true, Prime Minister, but don’t you think we should consider how to extract ourselves from the hole, if I may call it that, we ourselves have dug?”  

“Well, you certainly got me out of a further investigation into the refurbishment of our Downing Street flat. Carrie was delighted.  How did you get the Cabinet Secretary to stand aside so that you could exercise your charms with Kathryn Stone?” 

“My relationship with the Parliamentary standards commissioner is purely professional. I simply reminded her that she’d found you guilty of misreporting your Christmas holiday in Mustique in 2019 and her conclusion was promptly overturned by her committee of MPs. I gently suggested that the same thing happening again would be a little unfortunate. No blandishments were required.” 

“Good thinking, Humphrey. What do we do now?” 

“I fear Sue Gray is more formidable mettle. As fine a civil servant as you will find; she is unalloyed.” 

“Metal? Unalloyed?  What are you talking about, Humphrey?” 

“She understands that a good report should not be rushed. The substance of your excellent, if I may say so Prime Minister, statement to the House yesterday was that no one should rush to judgement. We should await Ms Gray’s report.” 

“We appointed her on 17th December when my boss Simon Case recused himself from the parties investigation on the grounds that his department had been having some of their own. Then of course we were into the Christmas break and Ms Gray would have had to attend the gatherings that were all entirely legitimate this time around.  So she could only start work this month.” 

“Stop dithering, Humphrey. She’s only asking a few people whether they went to any parties they should not have attended.  How long can that take? When can she publish?” 

“Well, the draft will have to be reviewed by the Cabinet Office and then by our lawyers and you know how quick they are.  And we may need to check it out with the European Court of Human Rights to ensure no one will be upset by her findings.” 

“OK, so when?” 

“Obviously this will have to be published at the beginning of a recess to ensure the MPs are on their hols. Easter is a good long break.  Shall we target 31st March?” 

“That’s excellent, Humphrey.  With the local elections just coming up none of my backbenchers will be looking for trouble.” 

“May I suggest, Prime Minister, that you spend a little time in the Commons’ tea room today? A few pats on the backs and intimations of promotion will work wonders.” 

“What do you think of my argument that I thought the May 2020 gathering was a work meeting, not a party?” 

“I don’t think it has had the credit it deserves.  No one who knows you would believe you would stay only 25 minutes if you thought it was a party. Furthermore, staying as long as 25 minutes at a business meeting is both unusually long and shows dedication to duty.” 

“Quite right, Humphrey, quite right.” 

“But the real clincher is that the rosé came from Tesco. Standards have undoubtedly slipped, Prime Minister, since David Cameron’s time, but who could possibly believe that Tesco rosé, probably from some cheap cooperative favoured by M. Macron, could possibly be served at a Number 10 party.” 

“You have to be right, Humphrey: that was no party; it was a business meeting.” 

Just when we could be free

Brexit is, of course, a controversial subject. Something that should not be controversial about it is that food prices within the EU are higher than those outside it. On the grounds that the entire Common Agricultural Policy is designed to make this be so. With food the EU is a zollverein - yes, a seamless market inside but with high walls to keep the outside out there, outside.

At which point we get this:

But as an island nation outside of the Continental trading bloc, the UK is going to need domestic farmers more than ever, while the pandemic was a wake-up call to the importance of food production self-sufficiency.

The correct conclusion is of course entirely the opposite. We are now free of that zollverein. It is possible for us, as it wasn’t before, to tear down those tariff and quota barriers that locked us away from the global food markets. We can - if we so wish - enjoy the finest foods from the globally finest suppliers at our leisure. Being outside the bloc enables us to actually be an island trading nation that is.

Yes, we do grasp that there are other issues here, what about that second Range Rover for the barley baron and all that. But the idea that leaving the EU means we must grow more of our own food is an absurdity.

Don’t forget, we have actually done this before. We abolished the Corn Laws in 1846, threw the British food market open to those finest global suppliers. That’s actually when British living standards started to markedly improve after the Engels Pause. We know the idea and action works.

We’ll even concede that maybe this is something to be talked about. But as we do so we’ve got to get the facts straight in the conversation. Being outside the EU makes it easier to import more of our food. As this would lead to cheaper and better food that’s not an argument in favour of more self-sufficiency in food production, is it now?

Bernard Levin told us to beware the Single Issue Fanatics

Not that we intend to pose as experts upon diet but:

Analysis of the government-funded National Diet and Nutrition Survey revealed that 11 per cent of males aged 11 to 18, 54 per cent of females aged 11 to 18 and 27 per cent of females aged 19 to 64 consumed less than the minimum recommended level of iron. Only 2 per cent of males aged 19 to 64 consumed less than the minimum recommended level of iron. Red meat is a source of iron, though it is also found in beans and nuts.

Givens said iodine deficiency was particularly worrying in young women approaching child-bearing age because it was essential for foetal health.

He said milk was the biggest source of iodine for most people but relatively few plant-based milk alternatives were fortified with the mineral.

We do grasp that idea that many have, that meat - or dairy - contributes to climate change and so vegetarianism or even veganism is warranted. Or on moral grounds and so on and on.

The point we do want to make is that one that Bernard Levin made for so many decades, beware of the Single Issue Fanatics (SIFs). Life is complex, it’s a series of more or less difficult trade offs. There is no one single true and pure answer to most of the questions that afflict us.

Take this nutrition thing, what we suppose would be called micronutrients. The iron problem is one that’s well known and it’s even true that certain vegans are, because of their problems, prescribed liver to eat in order to boost their intake.

Lack of iodine in the diet leads to goitre, that itself potentially leading to cretinism - no, not the insult, the diagnosis - in children. The usual population wide cure for this is to add iodine to salt. But we have those Single Issue Fanatics demanding that our diet be cleansed of salt as well.

We have so many SIFs shouting about - and with power over unfortunately - our diets that we are, as noted above, seeing falls in population health in some areas.

Our point is that this is testable and thereby proven in this area of diet. But that SIFs problem applies to all things. We have those insisting that climate change simply must be dealt with however - at whatever cost to life, living standards, liberty or anything else. Or that fracking cannot be allowed because earth tremors. Or that inequality must be fought with every available weapon no matter what those costs to liberty and so on again.

Life’s complicated, it’s a series of trade offs and those who become Single Issue Fanatics need to be either dialled back into an acceptance of that or ignored.

Sorry Claudia, billionaires have the right to exist

At the heart of Claudia Webbe’s recent tweets, where she stated that ‘every UK billionaire should be brought before a Public Inquiry to be held accountable for their wealth’ lies the dangerous fallacy that creating wealth is a zero-sum game.

Claudia claims that ‘if you cannot afford to ensure the workers that make your goods are paid at least a living wage, your business model is based on exploitation.’ There are a lot of issues with this statement. Firstly, what constitutes a ‘living’ wage? 

It is possible to live in a cave, without electricity or the delights of modern capitalism. Whilst humans did so for thousands of years and it would not be difficult to do so on minimum wage, I highly doubt Webbe would consider this ‘living’. All that is to say that what constitutes a ‘living’ wage is completely arbitrary.

More importantly, she is wrong in saying that business models that don’t live up to her standards of delivering a ‘livable’ wage are exploitative. Her tweets show that she arrived at this conclusion by judging how much ‘hard work’ workers put in. “Billionaires do not work harder than nurses,” she claims, then using this to justify her belief that billionaires do not deserve their wealth. 

Though here’s the thing: under capitalism, you are not rewarded for how much ‘hard work’ you put in, you are rewarded, through others voluntarily trading with you, for how much value you create. Elon Musk did not work millions of times harder than nurses, but he did create a product that has transformed millions of lives whilst promising to reduce air pollution. On the other hand, I would ‘work hard’ by breaking rocks all day but that would create very little value.

That is not to say the work of nurses, doctors, and supermarket workers has no value. On the contrary, I am extremely grateful to live in a country where we do have access to excellent healthcare and education. But wages should always be set according to supply and demand and there is nothing wrong with doing so.

At their core, prices are information signals. Thomas Sowell, in his book Basic Economics, very clearly demonstrates the implications of attempting to fix prices artificially high or low through price controls and taxes: it always distorts the efficient allocation of resources, as we’ve seen with the recent energy price cap.

Furthermore, to offer a job cannot be ‘exploitation.’ You are not forced to work for any company so people only do so as it benefits them. If you choose you do not want to live by growing your own food directly, you can obtain it by creating value in other ways then trading. The same is true for healthcare, education, and everything else. There is nothing ‘exploitative’ about that.

A claim I hear over and over again is that billionaires shouldn’t exist and the state should redistribute their wealth because the marginal utility of an extra Pound is higher for those at the bottom than those at the top. When examined more closely, I do not think this argument holds up.

It’s important to understand that most of the wealth owned by billionaires is speculative and illiquid. It is composed mostly of shares and real estate whose value is constantly fluctuating, and it is difficult to capture this, hence why many countries including France have abandoned their wealth taxes. What do advocates of wealth taxes propose? Seizing these assets and selling them off? Transferring these shares to poorer people? This would merely result in corporations becoming more badly run and would be a massive disincentive to investment.

Furthemore billionaires don’t just hold their money in a vault (though if they do, it’s their right). Many will reinvest it into other businesses, furthering innovation and creating more wealth. In addition to the direct benefits and jobs that are created, the resulting innovation overwhelmingly helps the poor. The invention of domestic appliances, to take one example, freed up the leisure time of the poor then created plenty of activities with which to fill that free time. But investment takes time and it takes money, and nobody spends their own money more wisely than themselves. The critics of billionaires should focus on the end result, not ideology.

To say that the rich are rich because the poor are poor is as wrong as saying that the healthy are healthy because the unhealthy are unhealthy. It’s just not true. I suggest that in 2022, Webbe reads a little more David Ricardo and a little less Karl Marx.

So, how was the housing crisis solved then?

A rather good article by David Olusoga* contains this:

While the 1921 census is a record of a moment of unique trauma, it arrives in the public domain at another fraught and disorienting point in British history, making it impossible not to draw comparisons between then and now.

The nation of 1921, like that of 2022, was afflicted by a deep and socially corrosive housing crisis.

The 20s didn’t in fact solve that housing problem although there was much trying to do so. There were advances, a possibly apocryphal story has Bath City Council declaring that a working man needed a garden large enough to grow the family’s vegetables plus the room to keep a pig. It is true that there are council built houses on the south of Bath today built at that time with enjoyably large gardens and they’re highly desired as a result. This also something that wouldn’t be allowed today as a result of that putrid (no lesser description seems appropriate) insistence that 30 to 35 dwellings must be packed into each single hectare of land.

What did solve that housing crisis was the rampant free market boom of the 1930s. Which was, of course, the last time that it was possible to build houses people want to live in where people want to live. Since then - with that little interregnum of not much building being done at all - we’ve all been constrained by the planning system which insists, in its wisdom, on not being allowed to build housing people wish to live in where people wish to live. The end result being that Britain now produces the smallest new housing in Europe. Smaller than vastly poorer places as well as richer.

The thing that has changed in the Town and Country Planning Act 1947 and successors. Which all does indeed simply ban the building of housing that people would like to live in where people would like to live.

Fortunately this makes the crafting of a solution rather simple. Blow up the Town and Country Planning Act 1947 and successors.

You know it makes sense.

*Yes, we know, we know, wonders will never cease etc

Petitio principii in defence of the NHS

One of the CEOs of one part of the National Health Service tells us that:

These are the advantages of a single, taxpayer-funded, national system. A system with a proper national and regional infrastructure to support local trusts to work together to meet collective patient need, free from the requirement to maximise individual organisational profit.

Ah, no, that is petitio principii, or begging the question. Assuming what it is necessary to prove.

Health systems everywhere have dealt with covid these past couple of years. It is possible that the NHS, with its centralised, single, taxpayer-funded and no profit motive, system has done better than others which do not share those attributes. It is also possible that it has done worse.

In order to praise that NHS structure - even to assume that it has done better - it is necessary to show that it has done better than those other systems with those different attributes. At which point, well, has it?

No evidence of any kind is presented. It is merely assumed that because the NHS is wondrous therefore the superb performance may be asserted and no actual reference to reality is required. This isn’t the way to prove anything.

It is now very clear that the NHS and our social care system do not have sufficient capacity. That asking staff to work harder and harder to address that gap is simply not sustainable. That we need a long-term, fully funded, workforce plan to attract and retain the extra 1 million health and care staff the Health Foundation estimates will be needed by 2031.

As a result that also rather fails. But then that should be obvious enough too. An insistence upon decade long plans to near double the workforce and also gain lots, lots, more money isn’t that innovative plan we’re all looking for to make even better what is already being assumed is the finest health care service in the world.

Chris Hopson is chief executive of NHS Providers

We’d also put forward the idea that management capable of such logical errors - and swathes of near mindless corporatespeak at the same time - might be one of the problems we all have with the NHS.

We don't believe a word of the ONS wealth statistics

Or rather, we’re entirely willing to believe the numbers presented, we just insist they’re not the relevant ones for decision making.

The richest 1% of households in the UK each have fortunes of at least £3.6m, according to new official figures that show the inequality gap was yawning even before the pandemic struck.

At the other end of the scale, the poorest 10% of households have just £15,400 or less, with almost half burdened with more debts than they had in assets, according to figures released on Friday by the Office for National Statistics (ONS).

It means the gap between rich and poor has widened to the largest in more than a decade. The ONS said the income inequality gap as measured by the Gini coefficient had “steadily increased to 36.3%”, which was “the highest level of income inequality since 2010”.

The full figures are here.

The wealth and income figures are being presented on entirely different bases. The income inequality figures are after the influence of tax and benefits and before those of government spending upon services - the NHS, education and so on. The wealth figures are the pure market distribution, before the effects of tax and benefits let alone state spending.

ONS is running with the mainstream in doing it this way, chapter two of this Saez and Zucman paper outlines the standard approach. We insist though that this standard approach is wrong.

Wrong in the sense that it does not provide useful information for decision making. The income inequality figures tell us what inequality remains after the things we do to reduce income inequality. It might be that we should do more - we think probably less but that’s an opinion not a fact - or that we’re doing about the right amount. But the data needed for decision making is what is the effect of what is already done and so what more, or less, needs to be?

The wealth figures are before all of that entire influence of government and the welfare state. Which means we have no data at all about the effectiveness of what is already done. Nor, of course, any useful information about whether more should be done or not.

A lifetime tenancy at below market rent is wealth. Education free at the point of use - or the health care from the NHS - might not be worth what’s spent upon it but it’s certainly wealth to the recipient. The wealth figures are so useless that private pensions are wealth while the state old age pension isn’t.

We do know how to calculate the wealth effect of those things. Just use the same technique as the Saez and Zucman paper, capitalise the income stream from them. But none of the wealth inequality measurements used do this. Therefore, as we really do insist, none of the wealth inequality measures are useful in a policy sense.

We don’t know the effects of what we’re already doing therefore we cannot, possibly, decide whether we should be doing more or not.

Think on it. If we don’t measure the effects of what we do then if we do more then we’ve not changed what we measure in the slightest, have we? So how can we use this as a measure of policy if the measure doesn’t measure the effects of policy?

We insist that all of the wealth inequality measures currently in use are wrong as sources of information for policy decision making purposes. The solution is to start measuring the real world properly - after the effects of what is already done - and until that is done we’re just going to keep shouting that all of these numbers being used are rubbish, rubbish, rubbish. We don’t believe a word nor digit of them.

You can't get the rich to pay for everything, they've not got enough money

Or, perhaps, you can’t get enough money purely off the rich to pay for everything without their leaving, or working less, or running into other of those inconvenient Laffer effects. This matters, more so for some dreams than others.

Polly Toynbee starts out by insisting that we all really must be willing to pay more for the NHS. To which our answer is, as it always has been, that if the NHS is such a wondrous system, both more efficient and also more fair, then we should need to pay less for the same level of health care as other countries. The insistence that we must pay at least as much as others is, we insist, evidence that the efficiency claim cannot be true.

However, Polly then goes on:

In this forever undertaxed country the tax revenue is 33% of GDP, while the 14 EU states pay an average 39%, according to the IFS.

Would we pay that EU average?

The idea that the EU consists of 14 countries amuses - what is meant is Western Europe and also EU. The other countries of the Anglosphere have generally lower tax to GDP ratios than the UK. Whether Britain should run at tax levels determined by geography or culture is an interesting question.

However, using Polly’s own source, we are told this:

UK raises less from social security contributions……

The amount the UK raises through income taxes (a category that includes smaller taxes such as capital gains tax, as well as the main income tax) is broadly in line with international norms – it is Scandinavia that stands out, with higher income taxes than elsewhere.

The amount the UK raises through VAT is also comparable to most other developed economies….

The biggest difference between the UK and most higher-tax countries is the amount of revenue raised through social security contributions (SSCs) levied on employees and employers. In 2019, National Insurance contributions (the UK version of SSCs) raised 6.6% of GDP, compared with 12.0% on average for the EU14. The UK’s lower revenues from SSCs more than explain the UK’s below-average tax take – the UK raises more than both the OECD and G7 average from taxes excluding SSCs.

Leave aside theory and even morals for a moment and become entirely pragmatic. We’ve a globe’s worth of rich country experience here over roughly a century of Big Government. Roughly the same portion of national income is raised by income taxation, the US aside roughly the same from consumption taxation, the only way anyone gets to larger than UK taxation - and thus state size - is through the regressive social security taxation.

We can indeed have a larger state but we can’t demand the rich pay for it. We’d need to near double national insurance - not rates but as a portion of GDP which would mean a more than doubling of rates given exemptions.

And that then becomes the actual question that needs answering. Not ~”would you like a better NHS by taxing those rich people behind the tree over there?” but instead “If you want more government then you, yes you Ms. Voter, are going to have to pay not 25% of your marginal income in combined national insurance but double that.”

At which point we might well find that the decision is to run with the culturally associated slightly smaller state of the Anglosphere rather than the slightly larger of Western Europe. Possibly, maybe, but that is actually the question, isn’t it?

For that massed set of experiences of those other countries does show us that the large state cannot be financed purely by taxing the rich. If it were then someone would be doing it, given the political attractiveness of the idea, wouldn’t they?

Fracking can play an important role in lowering energy costs

When energy costs rise, people feel the hit directly. Not only do their own energy bills go up, but so too does the price of food, electronics, and almost all other goods. People are quick to act in situations like this, as the now outgoing Government of Kazakhstan learnt following large protests over the cost of fuel earlier this week.

In the UK, the Government has tried to mitigate against rising prices through tinkering with the energy price cap (which has only worsened the problem - as predicted in 2017) and extending loans to troubled energy producers. Whilst proposed solutions, such as increasing the Warm Homes Allowance and cutting VAT, may address the problem in the short term, it does nothing to increase overall market supply and resilience. 

This is where hydraulic fracturing (fracking) comes in. This process of extracting oil and natural gas through the use of pumping pressurised fluids deep under the earth could be a source of large amounts of cheap and relatively clean energy. 

Prior to 2019, the Government’s position was extremely favourable. Private companies were encouraged to explore and drill for natural gas and oil in this way, and it was widely acknowledged, even by environmental groups, that gas obtained by fracking was a ‘bridge fuel’ which would allow us to transition away from dirtier coal and towards nuclear and renewable fuel sources.

In the United States, it was fracking that finally allowed the nation to gain energy independence. It has provided the nation with trillions of cubic feet of natural gas and helped lower energy prices for all. This is desperately needed in the United Kingdom where inflation is soaring and energy price hikes are set to cripple households up and down the country.

Fracking is also a lot better for the environment than other forms of fossil fuels which we currently use. Shale gas is significantly better for air quality. Particulate matter (PM) are small particles which when inhaled, can cause cancer and other health complications. Research has shown that natural gas contains a PM2.5 footprint 400 times smaller than coal, and a 4000-fold reduction in sulphur dioxide. Natural gas also produces the least CO2 of any fossil fuel. This is not to say that we shouldn’t aim to move towards cleaner energy sources like nuclear and wind, but that fracking is a quick solution and enables an immediate improvement in air quality.

Sadly, the Government’s approach changed in 2019, when the ‘precautionary principle’ was applied and an immediate moratorium was announced on fracking given the difficulty in ‘accurately predict[ing] the probability of tremors associated with fracking.’

Whilst this may be true to a certain extent, we must assess the trade-off between preventing a small disruption lasting several seconds with the loss of an important and relatively green energy source. Not only are earthquakes from fracking exceedingly rare, when they do occur their impact is small and often unnoticeable. Almost all of these ‘earthquakes’ are in fact microearthquakes, which cannot be felt and score less than 1 on the Richter scale. The impacts that any eventual earthquake would have on surrounding areas could easily be addressed through sensible legislation, say introducing a pigouvian tax on earthquakes over a score of 1 on the Richter scale. Organisations undertaking fracking operations would then have to pay out a fixed sum to each household or community within a given radius. The benefits are two-fold - we could benefit from cleaner and cheaper energy whilst local communities would also see a boost to their economies.

More likely is that opposition to fracking from green activists stems from idealism. There is a nirvana fallacy that just because natural gas still emits some carbon emissions, it should be ruled out entirely. This approach fails to assess the trade offs and unforeseen consequences, which as Kazakhstan shows, are very real. Allowing fracking is a quick and affordable way to address the energy crisis, and a move that the Government should make as fast as possible.